Colonial Trading, LLC v. Bassett Furniture Industrie
Filing
UNPUBLISHED PER CURIAM OPINION filed. Originating case number: 5:09-cv-00043-RLV-DCK Copies to all parties and the district court/agency. [999135150].. [12-2296, 12-2358]
Appeal: 12-2296
Doc: 38
Filed: 06/21/2013
Pg: 1 of 23
UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 12-2296
COLONIAL TRADING, LLC,
Plaintiff - Appellee,
v.
BASSETT FURNITURE INDUSTRIES, INC.,
Defendant - Appellant.
No. 12-2358
COLONIAL TRADING, LLC,
Plaintiff – Appellant,
v.
BASSETT FURNITURE INDUSTRIES, INCORPORATED,
Defendant – Appellee.
Appeal from the United States District Court for the Western
District of North Carolina, at Statesville.
Richard L.
Voorhees, District Judge. (5:09-cv-00043-RLV-DCK)
Argued:
May 15, 2013
Decided:
June 21, 2013
Before TRAXLER, Chief Circuit Judge; GREGORY and DUNCAN, Circuit
Judges.
Appeal: 12-2296
Doc: 38
Filed: 06/21/2013
Pg: 2 of 23
Affirmed by unpublished per curiam opinion.
ARGUED: Robert Walker Fuller, III, ROBINSON BRADSHAW & HINSON,
PA, Charlotte, North Carolina, for Appellant/Cross-Appellee.
June
K.
Allison,
WISHART,
NORRIS,
HENNINGER
&
PITTMAN,
Charlotte, North Carolina; Pamela Suzanne Duffy, WISHART,
NORRIS, HENNINGER & PITTMAN, Burlington, North Carolina, for
Appellee/Cross-Appellant.
ON BRIEF: Nathan C. Chase, Jr.,
ROBINSON BRADSHAW & HINSON, PA, Charlotte, North Carolina, for
Appellant/Cross-Appellee. Robert John Wishart, WISHART, NORRIS,
HENNINGER & PITTMAN, PA, Charlotte, North Carolina, for
Appellee/Cross-Appellant.
Unpublished opinions are not binding precedent in this circuit.
2
Appeal: 12-2296
Doc: 38
Filed: 06/21/2013
Pg: 3 of 23
PER CURIAM:
A
jury
awarded
$1,312,665.35
to
Colonial
Trading,
LLC
(“Colonial”) on its breach of contract claim against Bassett
Furniture
Industries,
Inc.
(“Bassett”)
involving recalled baby cribs.
$41,472.08
on
its
North
based
on
a
dispute
The jury also awarded Colonial
Carolina
Unfair
and
Deceptive
Trade
Practices Act (“UDTPA”) claim, N.C. Gen. Stat. § 75-1 et seq.,
which the district court trebled under N.C. Gen. Stat. § 75-16.
Bassett appeals, challenging the jury instructions, Colonial’s
UDTPA
award,
and
the
damages
calculation.
Colonial
cross
appeals the district court’s denial of its request for trebled
contract damages.
For the reasons that follow, we affirm.
I.
A.
Colonial is a North Carolina furniture sourcing agent that
imports furniture from Chinese companies for sale to American
furniture distributors.
The distributors make specific product
orders through Colonial, who effectively advances the cost of
the goods on behalf of the distributor by paying the Chinese
company
directly
company
then
for
releases
the
imported
bills
of
furniture.
lading
when
the
The
Chinese
goods
reach
American ports, and Colonial invoices the distributor for the
cost of the products.
3
Appeal: 12-2296
Doc: 38
Filed: 06/21/2013
Pg: 4 of 23
The case before us involves orders for three crib models,
designed
by
companies,
Bassett,
and
Babies’R’Us.
the
“standard
which
Colonial
Bassett
had
sourced
from
contracted
to
Chinese
resell
to
In 2005, during the course of the Colonial-Bassett
relationship,
Policy”;
which
Colonial
policy
quality
signed
subjects
Bassett’s
each
control
“Import
import
order
Sourcing
to
procedures.”
Bassett’s
J.A.
1249.
Additionally, the crib invoices Colonial submitted to Bassett
stated
that
Colonial’s
product
would
“be
manufacturing defects and raw material defects.”
Under
the
quality
control
procedures,
100%
free
of
J.A. 1261.
Bassett
supervised
the first production run and paid for third-party auditing of
each of the three crib models at issue.
Beginning in 2007,
however, reports from consumers and internal testing results led
Bassett to issue voluntary recalls of each of the three crib
lines, damaging its relationship with Babies’R’Us.
Instead
of
paying
Colonial’s
mounting
invoices
for
the
cribs and other furniture products, Bassett attempted to “charge
back” its recall costs by crediting those costs against invoices
from Colonial, including invoices for furniture other than the
cribs
in
advance
question.
more
funds
Additionally,
to
Chinese
when
Colonial
manufacturers
for
refused
to
Bassett’s
orders, effectively halting the release of the requisite bills
of lading, Bassett approached the Chinese manufacturers and paid
4
Appeal: 12-2296
Doc: 38
Filed: 06/21/2013
Pg: 5 of 23
at least one of them more than the contracted amount for the
furniture
so
the
manufacturer
would
release
bills
of
lading
directly to Bassett. 1
B.
Colonial
sued
Bassett
in
North
Carolina
court,
alleging
that Bassett (1) breached its contract with Colonial by failing
to pay its invoices, improperly cancelling orders, and applying
unauthorized
chargebacks;
(2)
tortiously
interfered
with
Colonial’s third-party contracts; and (3) committed unfair and
deceptive trade practices in violation of the North Carolina
UDTPA, by, among other things, inducing Colonial’s suppliers to
deal with Bassett instead of Colonial by bribery or coercion.
Bassett removed the case to federal court and counterclaimed,
alleging
that
it
had
properly
revoked
its
acceptance
of
the
cribs because Colonial (1) breached its contract with Bassett;
(2)
tortiously
interfered
with
Bassett’s
contracts
with
manufacturers; 2 and (3) breached its express warranty and implied
warranty of merchantability by delivering defective cribs.
After an eight-day trial, the district court reviewed the
1
Specifically, Bassett paid YanRong Furniture (“YanRong”),
one of the Chinese crib manufacturers, $300,880 to release bills
of lading directly to Bassett; YanRong had billed Colonial
$170,000 for the same goods. J.A. 269, 468-69.
2
The district court later dismissed Bassett’s tortious
interference claim.
5
Appeal: 12-2296
Doc: 38
Filed: 06/21/2013
Pg: 6 of 23
parties’ proposed jury instructions at length before sending the
case to the jury.
of
prepared
Although the court primarily used its own set
instructions,
it
did
include
Colonial’s
proposed
Instruction 16, regarding warranties and manufacturing defects,
see
infra
Part
II,
despite
Bassett’s
objection
that
the
Instruction was “misleading or confusing,” J.A. 866.
After
deliberations,
the
jury
awarded
Colonial
$1,312,665.35 on its breach of contract claim and $1 on its
tortious interference claim.
With respect to the UDTPA, the
jury found that Bassett’s conduct was in or affected commerce,
that
Bassett
acted
with
the
intent
of
interfering
with
Colonial’s relationships with its suppliers, and that Bassett
committed seven alleged unfair trade practices--all the elements
of a UDTPA claim. 3
The jury awarded UDTPA damages of $41,472.08
3
Specifically, the jury found, under Number 3(c) of the
verdict form, that Bassett: (A) “[o]rder[ed] and receive[d]
goods from Colonial for which [it] did not intend to pay”; (B)
“[u]nilaterally charge[d] back Colonial for non-defective goods
on the false justification that they were defective”; (C)
“[u]nilaterally charge[d] back Colonial for expenses which were
not permitted under any contractual obligation under the false
justification that they were proper charge back expenses”; (D)
“[w]ithout
justification
incur[red]
unnecessary
expenses
associated with the recall with the intent to improperly charge
back Colonial for such expenses”; (E) “[p]a[id] Colonial’s
suppliers and persuade[d] Colonial’s suppliers not to deal with
Colonial”; (F) “[i]nduce[d] Colonial’s suppliers to deal with
Bassett instead of Colonial by bribery or coercion”; and (G)
“misuse[d] its unequal financial power by creating a situation
which crippled Colonial financially and which caused the
factories to deal directly with [it].” J.A. 234-35.
6
Appeal: 12-2296
Doc: 38
Filed: 06/21/2013
Pg: 7 of 23
on the alleged unfair trade practice listed at 3(c)(F) of the
verdict form--that Bassett “[i]nduce[d] Colonial’s suppliers to
deal with Bassett instead of Colonial by bribery or coercion,”
J.A. 235; supra note 3.
other
six
Bassett’s
express
alleged
It awarded $1 in nominal damages on the
unfair
counterclaims,
warranty,
which
trade
practices.
except
it
for
found
its
The
claim
Colonial
had
jury
for
denied
breach
breached.
of
It
awarded $1 in nominal damages to Bassett.
Following
trial,
Colonial
moved
for
attorneys’
fees
and
treble damages on its breach of contract and UDTPA awards.
district
with
court
respect
distinct
granted
to
conduct
its
Colonial’s
UDTPA
supported
request
recovery,
the
breach
for
treble
explaining
of
The
damages
that,
contract
and
since
UDTPA
awards, treble UDTPA damages were not duplicative of Colonial’s
recovery for breach of contract.
Therefore, the district court
trebled the UDTPA damages to $124,416.24.
This appeal followed.
II.
The primary thrust of Bassett’s appeal focuses on Number 16
of
the
jury
instructions
(“Instruction
16”
or
“the
Instruction”), which the district court adopted from Colonial’s
proposed instructions.
Instruction 16 reads, in its entirety:
I further instruct you that warranting a shipment to
be without defects does not mean that each and every
part
of
each
and
every
crib
would
have
no
7
Appeal: 12-2296
Doc: 38
Filed: 06/21/2013
Pg: 8 of 23
manufacturing defects. Because any crib of a specific
model breaches a warranty does not mean that the
purchaser is entitled to any and all of its expenses
related to all cribs of that design.
In order to
permit rejection of and expenses incident to an entire
shipment for nonconformity the purchase must show that
the defect rate was higher than agreed upon or lacking
specific agreement was higher than the standard in the
industry.
To the extent that Bassett has shown that
specific cribs have manufacturing defects [and] will
fail to meet the warranties made by Colonial[,]
Bassett is entitled to damages for breach of warranty
for such cribs.
J.A. 1041.
jury
to
Bassett contends that the Instruction (1) caused the
ignore
misinstructed
the
the
express
jury
warranty
about
signed
damages
in
by
breach
Colonial;
of
(2)
warranty
cases, generating confusion about the appropriate award; and (3)
misinformed the jury about the law governing Bassett’s breach of
contract, revocation of acceptance, and implied warranty claims,
so as to require a new trial.
A.
We address each argument in turn.
Standard of Review
While we review a district court’s decision to give or not
give a jury instruction for abuse of discretion, “we conduct a
de novo review of any claim that jury instructions incorrectly
stated the law.”
(4th
Cir.
2012)
properly object
United States v. Mouzone, 687 F.3d 207, 217
(citation
to
a
jury
omitted).
If
a
instruction
under
party
failed
Federal
Rule
to
of
Civil Procedure 51(c), however, we review jury instructions for
plain error.
Spell v. McDaniel, 824 F.2d 1380, 1398-99 (4th
8
Appeal: 12-2296
Cir.
Doc: 38
1987).
conclude
Filed: 06/21/2013
In
that
either
a
Pg: 9 of 23
case,
particular
we
jury
reverse
“only
instruction
when
must
we
can
necessarily
have caused the jury to act in complete ignorance of, or to have
misapplied,
fundamentally
controlling
legal
principles
inevitable prejudice of an aggrieved party.”
jury
instructions
“must
be
construed
in
to
Id. at 1399.
light
of
the
The
the
whole
record,” and “will be reversed . . . ‘only if the error is
determined to have been prejudicial, based on a review of the
record as a whole.’”
Abraham v. Cnty. of Greenville, S.C., 237
F.3d 386, 393 (4th Cir. 2001) (citing Wellington v. Daniels, 717
F.2d 932, 938 (4th Cir. 1983)).
B.
As
a
threshold
Preservation of Error
matter,
we
must
decide
whether
preserved its current objection to Instruction 16.
Bassett
Colonial
contends that Bassett’s objection to the Instruction below--that
it was “misleading or confusing”--was insufficient to preserve
the issue for appeal.
See J.A. 866; Fed. R. Civ. Proc. 51(c)(1)
(“A party who objects to an instruction or the failure to give
an instruction must do so on the record, stating distinctly the
matter objected to and the grounds for the objection.”).
support
of
its
argument,
Colonial
cites
Belk,
Inc.
v.
In
Meyer
Corp., U.S., 679 F.3d 146, 153 n.6 (4th Cir. 2012), in which we
held
that
the
appellant
had
waived
its
jury
instruction
challenge by both failing to raise it in the opening brief and
9
Appeal: 12-2296
Doc: 38
neglecting
however,
to
did
Filed: 06/21/2013
object
not
properly
raise
a
Pg: 10 of 23
at
trial.
specific
Counsel
objection
to
for
Belk,
any
jury
instruction; rather, he requested that the court administer his
proposed
jury
invocation
of
instructions.
proposed
Id.
jury
We
instructions”
preserve the issue for our review.”
present a closer question.
found
Id.
the
“general
“insufficient
to
The facts before us
Bassett’s terse, general objection
certainly did not aid the district court in fully considering
the nature of its challenge.
But since Bassett’s arguments fail
on the merits, we prefer to rely for our affirmance on that
ground, and thus proceed to a de novo review of Instruction 16.
C.
Instruction 16
1.
Bassett
contends
that
the
district
court
improperly
instructed the jury with respect to express warranties when it
adopted
Colonial’s
language
and
stated
that
“warranting
a
shipment to be without defects does not mean that each and every
part
of
defects.”
each
and
every
J.A. 1041.
crib
would
have
no
manufacturing
The parties proffer competing case law in
support of their respective views, none of which we ultimately
find convincing.
Compare Knapp Shoes, Inc. v. Sylvania Shoe
Mfg. Corp., 72 F.3d 190, 199 (1st Cir. 1995) (concluding that an
express warranty guaranteeing a shipment of shoes to be “without
defect” “can at most be read to mean that [the seller] was
10
Appeal: 12-2296
Doc: 38
Filed: 06/21/2013
Pg: 11 of 23
capable of producing shoes that met industry standards as to the
percentage of defects”) with QVC, Inc. v. MJC America, Ltd., --F. Supp. 2d. ---, No. 08-3830, 2012 WL 5250266, at *22 (E.D. Pa.
Oct.
22,
2012)
(finding
that,
where
the
seller
provided
a
defective product, it “broke its promise . . . that all of the
[products] would be free from all defects,” allowing the buyer
to recover recall-related costs).
As the district court’s subsequent instructions adequately
stated
the
controlling
law,
we
conclude,
without
deciding
whether Instruction 16 was erroneous, that any misstatement was
harmless.
See Volvo Trademark Holding Aktiebolaget v. Clark
Mach. Co., 510 F.3d 474, 485 (4th Cir. 2007) (“[P]roblems in
jury instructions will not warrant reversal of a jury verdict so
long as, taken as a whole, the instructions adequately state the
controlling legal principles.”).
The court’s later instructions
on express warranties track the North Carolina statute regarding
the same.
Compare N.C. Gen. Stat. § 25-2-313 (defining the
three methods for express warranty formation) with J.A. 1048-50
(instructing the jury as to the same three methods for forming
an express warranty).
instruction,
produce
cribs
if
According to the court’s express warranty
Bassett
that
were
proved
100
that
percent
Colonial
promised
free
manufacturing
of
“to
defects and of raw material defects,” it would be the jury’s
duty
to
find
that
an
express
warranty
11
existed.
J.A.
1050.
Appeal: 12-2296
Doc: 38
Filed: 06/21/2013
Pg: 12 of 23
Further, having explained what would constitute a breach in its
instructions on Colonial’s claims, id. at 1021 (“[A] breach of
contract
is
.
.
.
any
unjustified
failure
to
perform
any
promise, express or implied, that is part of the contract,” and
“occur[s] when a party without legal excuse fails to perform any
promise which is . . . part of the contract.”), the court made
clear that “Bassett’s counterclaim can best be understood by
relying on the terms . . . already explained,” id. at 1038.
Far
from
warranty,
the
encouraging
the
instructions
jury
fully
formation and breach of contract.
to
“ignore”
explained
the
express
express
warranty
Indeed, it seems strange for
Bassett to argue that Instruction 16 caused the jury to “ignore”
the express warranty, when breach of express warranty was the
only
claim
on
which
it
was
successful.
Since
“a
single
instruction to a jury may not be judged in artificial isolation,
but must be viewed in the context of the overall charge,” United
States v. Park, 421 U.S. 658, 674 (1975) (citation and internal
quotation marks omitted), the court’s accurate explanation of
how to evaluate whether Colonial made an express warranty and
the jury’s actual finding that Colonial breached the express
warranty
indicate
that
any
error
did
not
cause
the
jury
to
“misappl[y] fundamentally controlling legal principles,” Spell,
824 F.2d at 1399.
12
Appeal: 12-2296
Doc: 38
Filed: 06/21/2013
Pg: 13 of 23
2.
Bassett
further
contends
that
the
Instruction
improperly
limited the jury to awarding damages for specific, defective
cribs, instead of compensating Bassett for all costs associated
with recalling the crib models.
Insofar as Bassett alleges that it could recoup more than
costs associated with specific, defective cribs, we agree.
The
North Carolina Supreme Court has held, in a case alleging breach
of the warranty of fitness, that “it need not be shown that any
given
unit
is
totally
unusable
before
a
breach
of
warranty
occurs,” rejecting the argument that “every commercial unit in
an order of goods manufactured under the same specifications
must be shown to have become totally unusable before recovery
may be had for breach of warranty with respect to the entire
order.”
Tenn.
Carolina
Transp.,
S.E.2d 711, 721 (N.C. 1973).
Inc.
v.
Strick
Corp.,
196
The court explained that the fact
that nine trailers out of an order of 150 had malfunctioned,
“entitle[d] [the] plaintiff to go to the jury on the breach of
warranty issue with respect to all 150 trailers.
jury
to
determine
.
.
.
whether
the
fitness
It is for the
warranty
was
breached as to all, part or none of the 150 trailers, and assess
the damages accordingly.”
Id. at 722.
Here, however, the jury
made just that determination, and did not explicitly find that
the cribs were defective or that the damages amounted to more
13
Appeal: 12-2296
Doc: 38
Filed: 06/21/2013
Pg: 14 of 23
than a nominal sum.
Furthermore, examining the instructions “as a whole,” the
court properly explained damages calculation to the jury, again
rendering any error in Instruction 16 harmless.
55.
See J.A. 1052-
The court instructed that “Bassett should not be denied
damages simply because they cannot be calculated with exactness
or
high
included
damages.
degree
of
mathematical
provisions
explaining
certainty,”
incidental
J.A.
and
1054,
and
consequential
Additionally, the district court properly instructed
the jury on how to calculate damages based on the reduced value
of the cribs, in keeping with the tenets of North Carolina law
on damages for breach of warranty.
J.A. 1053; see Alberti v.
Manufactured Homes, Inc., 407 S.E.2d 819, 826 (N.C. 1991) (“In
warranty
actions,
the
measure
of
damages
is
generally
the
difference between the value of the goods as accepted and the
value as warranted.”) (citation omitted).
In further compliance
with North Carolina law, the court also cautioned that if the
jury found a breach, but Bassett failed to prove damages or the
jury did not find damages, “it would be [the jury’s] duty to
write a nominal amount of $1 in the blank space provided,” J.A.
1055, “in recognition of technical damage resulting from the
breach,” id. at 1052; see Hairston v. Atl. Greyhound Corp., 18
S.E.2d 166, 168 (N.C. 1942) (“What is meant by nominal damages
is a small trivial sum awarded in recognition of a technical
14
Appeal: 12-2296
injury
Doc: 38
which
Filed: 06/21/2013
has
caused
no
Pg: 15 of 23
substantial
damage.”)
(internal
quotations and citation omitted).
If anything, the jury’s damages calculation indicates not
that it was confused about how to separate “defective” cribs
from nondefective cribs for its calculation, but rather that it
concluded that Bassett’s failure to prove damages on its breach
of express warranty claim required it to award the nominal sum
of $1, in line with the court’s instructions.
properly
instructed
damages
unless
the
Bassett
jury
that
did
them,
proved
it
any
Because the court
not
have
to
award
misstatement
with
respect to what Bassett could recover on its breach of warranty
claim in Instruction 16 was not prejudicial. 4
3.
Finally, Bassett argues that because Instruction 16 implied
that the existence of some crib defects would be acceptable, the
Instruction
Bassett’s
clouded
breach
of
the
jury’s
contract,
analysis
revocation
with
of
implied warranty of merchantability claims.
respect
to
acceptance,
and
Again, Bassett’s
argument hinges on the conclusion that the jury found the cribs
4
If the jury had awarded a larger sum for Colonial’s breach
of express warranty, indicating that it intended to compensate
Bassett for the cribs that did not conform to Colonial’s express
warranty, Bassett’s argument regarding jury confusion over
damage calculation might be more persuasive. The nominal damage
award of $1 indicates that, under the court’s instructions, the
jury did not find that Bassett proved damages at all.
15
Appeal: 12-2296
Doc: 38
Filed: 06/21/2013
Pg: 16 of 23
defective, a conclusion belied by the jury’s findings.
Under North Carolina law, Bassett needed to show that the
cribs were defective at the time of sale to succeed on its
claims
involving
the
implied
revocation of acceptance.
565
S.E.2d
140,
147
warranty
of
merchantability
and
See Dewitt v. Eveready Battery Co.,
(N.C.
2002)
(“To
establish
a
breach
of
implied warranty of merchantability . . . a plaintiff must prove
. . . that the goods did not comply with the warranty in that
the goods were defective at the time of sale.”) (citation and
internal quotation marks omitted); Harrington Mfg. Co., Inc. v.
Logan
Tontz
Co.,
253
S.E.2d
282,
286
(N.C.
Ct.
App.
1979)
(holding that to justify revocation, the plaintiff must prove,
in
addition
to
other
elements,
“that
the
goods
contained
nonconformity that substantially impaired their value”).
a
That
the jury found in favor of Colonial on both of these claims
indicates
that
it
did
not
determine
that
defective at the time Bassett accepted them.
the
cribs
were
Further, because
the court properly instructed the jury with respect to Bassett’s
implied warranty of merchantability, J.A. 1050-52, revocation of
acceptance, id. at 1042-48, and breach of contract claims, id.
at 1039, any error in Instruction 16 was harmless.
III.
Bassett next contends that we should vacate the district
16
Appeal: 12-2296
Doc: 38
court’s
UDTPA
Filed: 06/21/2013
award
because
Pg: 17 of 23
its
dispute
with
Colonial
was
contractual, the award duplicates Colonial’s recovery for breach
of contract, and Instruction 16 affected the jury’s assessment
of the alleged unfair trade practices. 5
A.
Standard of Review
We review the district court’s legal determinations with
respect to the UDTPA claim de novo.
164.
Belk, Inc., 679 F.3d at
“We review a jury’s factual findings on a UDTPA claim ‘in
the light most favorable to the prevailing party, and [i]f, with
that evidence, a reasonable jury could return a verdict in favor
of plaintiffs, [we] must defer to the judgment of the jury, even
if [our] judgment on the evidence differs.’”
Id. (quoting ABT
Bldg. Prods. Corp. v. Nat’l Union Fire Ins. Co. Of Pittsburgh,
472 F.3d 99, 113 (4th Cir. 2006)).
B.
Unfair Trade Practices
In order to recover under the UDTPA, a party is obliged to
show: “(1) that the defendant engaged in conduct that was in or
affecting commerce, (2) that the conduct was unfair or ‘had the
capacity or tendency to deceive,’ and (3) ‘that the plaintiff
suffered
actual
injury
as
a
proximate
result
deceptive statement or misrepresentation.’”
5
of
defendant’s
ABT Bldg., 472 F.3d
Because Bassett’s argument with respect to Instruction 16
in the UDTPA context is largely duplicative of those just
discussed, we do not repeat that analysis here.
17
Appeal: 12-2296
at
Doc: 38
122
Filed: 06/21/2013
(citation
Pg: 18 of 23
omitted).
In
making
this
showing,
the
“occurrence of the alleged conduct, damages, and proximate cause
are fact questions for the jury.”
Id. at 123 (citation and
internal quotation marks omitted).
“[W]hether [such] conduct
was unfair or deceptive is a legal issue for the court.”
Thus,
when
a
jury
finds
a
defendant
committed
Id.
infringing
conduct, “it is then the duty of the court to determine whether,
as
a
matter
of
law,
such
deceptive trade practice.”
conduct
constituted
an
unfair
or
S. Atl. Ltd. P’ship of Tenn., LP v.
Riese, 284 F.3d 518, 534 (4th Cir. 2002).
In reviewing this determination, we have recognized that,
“under North Carolina law, the conduct sufficient to constitute
an unfair or deceptive trade practice ‘is a somewhat nebulous
concept,’ and depends on the circumstances of the particular
case.”
ABT
Bldg.,
472
F.3d
at
122-23
(citation
omitted).
However, “only practices that involve ‘[s]ome type of egregious
or
aggravating
U[D]TPA.”
circumstances’
Riese,
284
are
F.3d
at
sufficient
535
to
violate
(citation
the
omitted).
“Generally, a trade practice will only be deemed ‘unfair when it
offends established public policy as well as when the practice
is
immoral,
unethical,
oppressive,
unscrupulous,
or
substantially injurious to consumers.’”
ABT Bldg., 472 F.3d at
123
S.E.2d
(quoting
1981)).
Marshall
v.
Miller,
276
397,
403
(N.C.
North Carolina courts have repeatedly held that “a mere
18
Appeal: 12-2296
Doc: 38
Filed: 06/21/2013
Pg: 19 of 23
breach of contract, even if intentional, is not sufficiently
unfair or deceptive to sustain an action under [the UDTPA].”
Broussard v. Meineke Disc. Muffler Shops, Inc., 155 F.3d 331,
347 (4th Cir. 1998); see, e.g., Branch Banking & Trust Co. v.
Thompson,
breach
418
S.E.2d
of
694,
contract,
700
(N.C.
without
Ct.
App.
1992)
substantial
(finding
aggravating
circumstances, insufficient to support a UDTPA claim).
Bassett insists that Colonial’s UDTPA claim arises from the
same conduct underlying its contract claims, and thus cannot
support the court’s finding that Bassett’s conduct constituted
an unfair or deceptive practice justifying an UDTPA award.
The
jury, however, found alleged unfair trade practices attenuated
from
the
basic
suppliers
not
suppliers
to
bribery
and
contract
to
deal
deal
with
coercion,
dispute,
with
as
instead
otherwise
financial power against Colonial.
paying
Colonial’s
inducing
Colonial,
Bassett
and
such
Colonial’s
of
Colonial
misusing
its
through
unequal
See J.A. 235, supra note 3.
North Carolina courts have upheld UDTPA awards for tortious
interference
with
contract,
commercial
bribery,
and
coercive
conduct, practices akin to what the jury found here.
See, e.g.,
United
389
Labs.,
Inc.
v.
Kuykendall,
370
S.E.2d
375,
(N.C.
1988) (explaining that N.C. Gen. Stat. § 75-1.1 could apply “to
tortious interference with contract situations”); Media Network,
Inc. v. Long Haymes Carr, Inc., 678 S.E.2d 671, 684 (N.C. Ct.
19
Appeal: 12-2296
App.
Doc: 38
2009)
Filed: 06/21/2013
(“We
also
note
Pg: 20 of 23
that
if
a
UDTP[A]
claimant
can
establish that the defendant committed commercial bribery, that
is sufficient to make the UDTP[A] claim.”); Wilder v. Squires,
315 S.E.2d 63, 67 (N.C. Ct. App. 1984) (threatening not to pay
plaintiff unless he agreed to a particular course of action was
coercive
and
practice).
qualified
as
an
unfair
and
deceptive
trade
We therefore decline to disturb the award.
C.
Collection of Contract and UDTPA Damages
Bassett contends that Colonial should have been required to
elect between contract or UDTPA damages, but should not have
recovered both.
Bassett’s argument fails because it is premised
upon the assumption or mistaken belief that Colonial’s contract
and
UDTPA
claims
arise
Appellant’s Br. at 46-47.
from
the
same
improper
conduct.
While Bassett is correct that, if the
“same course of conduct gives rise” to a plaintiff’s breach of
contract and UDTPA claims, the plaintiff may recover “either for
the breach of contract, or for violation of [the UDTPA], but not
for both,” Marshall v. Miller, 268 S.E.2d 97, 103 (N.C. Ct. App.
1980) modified and aff’d, 276 S.E.2d 397; see United Labs., Inc.
v. Kuykendall, 437 S.E.2d 374, 379 (N.C. 1993) (explaining that
the election of remedies “prevent[s] double redress for a single
wrong”),
this
inapplicable
accurate
here.
Far
summary
from
of
resting
North
Carolina
on
same
the
law
is
course
of
conduct, the district court made clear that “[w]hile the UDTPA
20
Appeal: 12-2296
Doc: 38
Filed: 06/21/2013
Pg: 21 of 23
cause of action is partly derivative of Colonial’s [breach of
contract] claims,” J.A. 1232, “the jury rationally viewed the
conduct and the damages proximately caused by the specific UDTPA
conduct as distinct from the breach of contract,” id. at 1234.
While some of the same conduct--particularly the conduct
alleged as unfair trade practices at 3(c)(A)-(D) of the jury
verdict form--also formed the basis for Colonial’s breach of
contract claim, compare J.A. 232 with id. at 234, the conduct
underlying
Colonial’s
Specifically,
the
jury
UDTPA
recovery
awarded
UDTPA
does
damages
not
to
overlap.
Colonial
on
3(c)(F), id. at 235, based on Bassett’s bribery and coercion of
the
Chinese
manufacturer
YanRong.
This
award
obviates
any
concerns of “duplicative” recovery.
IV.
Colonial
its
request
cross-appeals
for
treble
the
district
contract
court’s
damages.
In
rejection
Gray
v.
of
North
Carolina Insurance Underwriting Ass’n, 529 S.E.2d 676, 684-85
(N.C.
2000),
the
North
Carolina
Supreme
Court
addressed
a
similar argument that, in a case involving successful recovery
for breach of contract and UDTPA claims, the court should treble
the entire award.
Rejecting this argument, the Supreme Court
concluded that only “damages proximately caused by a violation
of [the UDTPA] shall be trebled, not [] damages on every claim
21
Appeal: 12-2296
Doc: 38
Filed: 06/21/2013
Pg: 22 of 23
that happens to arise in a case involving a violation of [the
UDTPA].”
Id.
Because the damages for breach of contract did
not “aris[e] from a violation of [] § 75-1.1,” they could not be
trebled.
Id. at 684.
Since Gray, the North Carolina Court of
Appeals has allowed for trebling of breach of contract damages
when “the breach of contract accompanied by aggravating factors
is what gave rise to the [UDTPA] claim.”
See, e.g., Johnson v.
Colonial Life & Accident Ins. Co., 618 S.E.2d 867, 871-72 (N.C.
Ct.
App.
divide
2005)
the
aggravated
(“[T]he
breach
the
of
court
will
contract
breach
when
not
action
in
allow
and
a
the
substance
defendant
conduct
there
is
to
which
but
one
continuous transaction amounting to unfair and deceptive trade
practices.”).
Colonial urges us to conclude that its contract damages
“arise
from”
the
unfair
trade
practices
listed
on
the
jury
verdict form at J.A. 234-35 3(c)(A)-(D), and should therefore be
trebled.
Notwithstanding Colonial’s puzzling reversal from its
argument that distinct conduct supports their recovery of both
contract and UDTPA damages, see supra Part III.B, the verdict
does
not
support
Colonial’s
argument.
While
there
is
some
overlap between the acts underlying the breach of contract claim
and
the
alleged
opportunity
practice.
to
unfair
award
trade
specific
practices,
damages
the
for
jurors
each
had
unfair
the
trade
As discussed supra, the only practice on which they
22
Appeal: 12-2296
Doc: 38
Filed: 06/21/2013
Pg: 23 of 23
chose to award damages was the bribery and coercion claim, not
the contract-related acts.
A closer look at the verdict in Gray further supports our
decision to follow that case and reject Colonial’s argument.
Gray,
as
here,
the
verdict
form
required
the
jury
to
In
first
determine whether the parties formed a contract, and then, if
the defendant breached the contract, to assess damages.
S.E. 2d at 679.
See 529
The form then asked the jury to determine
whether the defendant had committed any of several acts that
could constitute unfair trade practices, and to asses related
damages.
The North Carolina Supreme Court allowed trebling of
only the latter, UDTPA damages.
verdict
form--which
required
Colonial’s similarly structured
the
jury
first
to
determine
contract damages, then to assess practices that could constitute
violations of the UDTPA and determine related damages--supports
our decision to affirm the district court’s decision to treble
only the UDTPA damages, rather than the entire jury award.
V.
For the foregoing reasons, the judgment of the district
court is
AFFIRMED.
23
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?